As a finite resource, our time is a precious commodity. But determining the precise value it holds in our lives is not easy. But a new tool can now tell you how much money your time is really worth — and how to spend it more wisely.
The free online tool was put together by Clearer Thinking and is available here.
Importantly, it does more than just calculate the value of your time based on your income. After answering a series of questions, it produces a personalized report that can help you figure out answers to questions like:
- Whether to take on additional part-time work and at what hourly rate
- Whether taking a cab is worth the extra cost
- How long you should wait in line for a free item
- Whether you should try to scale down or scale up your hours at your current job
- Whether you have inconsistencies in your thinking about the value of your time
- Whether it's worth hiring a personal assistant, laundry service, or other help
It should take you anywhere from about 5 to 10 minutes to complete the survey, but it's totally worth it. I learned, for example, that I'm more reluctant than I should be about spending money in order to free up my time (e.g. by paying for time-saving services or purchasing time-saving devices).
I recently spoke to Clearer Thinking developer Spencer Greenberg to learn more about the tool and what motivated him to put it together.
"We were inspired to create this tool when we realized how extremely inconsistent we humans are about the way we value time," he says. "This inconsistency leads to poor decisions in many areas of life."
For example, and as in my case, Greenberg says many of us don't delegate as much as we should, instead continuing to do tasks — for instance, cleaning, household repairs, or errands — that others who place a lower dollar value on their own time could do at least as effectively, if not more so.
"Basic economics tells us that this is inefficient, and that both parties would benefit from delegation," he says. "Many other people have the opposite inconsistency: they are more reluctant to take on extra part-time work than they should be, given the value they place on their time."
He provides an example: "This idea that we behave inconsistently really sunk in for me when I watched someone who makes $250,000 per year agonize for half an hour over how to spend a $20 gift certificate. When I explained to her the idea of the implicit dollar value of time, she understood it immediately, and realized that she'd spent too long making that decision. Her job pays her about $40 for each half an hour of her work time, and her free time (which is scarce in her case) is even more valuable than that to her. A related idea is that if it takes you 20 seconds to walk over and pick up a penny on the street, during that 20 seconds you're getting compensated at a rate of only $1.80 per hour."
Greenberg says most people don't think in these terms, even though it's extremely useful to do so. "But this is not very surprising, since before we created our tool, there wasn't an easy way to accurately estimate the value of your time, and many people haven't been taught this useful way of thinking. That's why our free calculator not only estimates the true value of each additional hour of your time, but also gives you a customized report explaining how you can benefit from this information."
I asked him why the program collect the variables that it does.
"Since people tend to be inconsistent in their thinking on this topic, you can't merely ask one or two questions to accurately determine the value of someone's time," he responded. "That's why our program attacks the question from four different angles, and then combines all that information to get a good estimate. For instance, some people aren't willing to spend enough money to save time in the future, and others aren't as willing as they should be to give up time for money. Our calculator automatically assesses all these different perspectives, and points it out to you when there are inconsistencies."
Find out what your time is really worth to you.